Jersey: Types of Company
In June 2009, Jersey's Privy Council approved an order allowing Foundations to be set up in Jersey.
Foundations have a long history in continental Europe. In medieval times they were used for charitable or religious purposes. They are now commonly used for wealth management, and residents of jurisdictions like the Middle and Far East are more familiar with foundations than with trusts, which do not exist in their legal systems. Jersey is the first of the Crown Dependencies to bring in a genuine foundation product.
The regulations will permit foundations to migrate in and out of Jersey. They also provide for existing Jersey companies to convert to foundations.
The approval of the Jersey Foundations Law by Jersey’s Privy Council was welcomed by Jersey Finance as a hugely positive step in affirming the island as a centre of excellence for private wealth management business.
Foundations sit alongside existing vehicles such as companies, trusts and limited partnerships for use in financial planning and private wealth management strategies.
A foundation must have regulations. These regulations must:
- Establish a council to administer the foundation’s assets and to carry out its objects;
- Provide for the appointment, retirement, removal and remuneration (if any) of its members;
- Set out how the decisions of the council are to be made and, if any decision requires the approval of any other person, specify the decisions and that person; and
- Set out the functions of the council, and, if they must or may be delegated or exercised in conjunction with any other person, the extent to which this must or may be done.
In particular, the regulations of a foundation must set out a procedure that ensures that a qualified person is appointed to be the qualified member of its council as soon as reasonably practicable if its qualified memberdies, retires, or otherwise ceases to act or to be able to act.
Whilst similar in design to foundations in other jurisdictions, the Jersey structure introduces the concept of a ‘guardian’ with oversight over the council’s activities in relation to the foundation and ensures that it achieves the broad objectives outlined in its constitutive documents.
A foundation must have a council to administer the assets of the foundation; and to carry out its objects. The council of a foundation may have one or more members and must include a qualified person. However, although the council of a foundation may include more than one qualified person it may not have more than one qualified member at any one time.
An act of a member of the council of a foundation is valid despite any defect that may afterwards be found in the appointment of the member; or the member’s qualifications.
A beneficiary under a foundation has no interest in the foundation’s assets; and is not owed by the foundation or by a person appointed under the regulations of the foundation a duty that is or is analogous to a fiduciary duty. However, if a beneficiary under a foundation becomes entitled to a benefit under the foundation in accordance with the charter or the regulations of the foundation; and the benefit is not provided, the beneficiary may seek an order of the Royal Court ordering the foundation to provide the benefit.
The beneficiary must seek the order within the period of three years from the time when the beneficiary became aware of his or her entitlement to the benefit, provided they have reached the age of 18.
Jersey foundations are expected to be a particularly attractive option for wealthy clients in civil law jurisdictions where the concept of a trust vehicle is not so familiar.
The Foundations (Jersey) Law 2009, entered into force on July 17, 2009.
Offshore law firm Mourant du Feu & Jeune announced on July 21 that it had established the first two foundation structures in Jersey. The two foundations were established on the first day the new law came into force in Jersey.
A registration fee of GBP200 is payable.